Excessive Audits

(15-2(B) KCCR 609, 2001Hun-Ma754, December 18, 2003)

Held, audit following the previous one similarly conducted by anadministrative authority including general environmental assessmentover a particular business entity in fifty-five(55) occasions over aperiod of two years and ten months through which no particular act in violation of law was revealed, is not unconstitutionally excessive, although restrictive upon the complainant's freedom of business.

A. Background of the Case

Industry ○○, a partnership, which is the complainant in this case,is a corporation manufacturing and selling construction materialssuchas bricks and blocks by recycling industrial waste. The super-

visingauthorities of the complainant including the head of theKunof Buyeo(the respondent in this case) and its higher authorities (includ-

ing thegovernor of South Choongcheong Province, the minister of the Ministryof Environment, and the chair of the Board of Audit and Inspectionof Korea) conducted an audit over the complainant for a period ofapproximately two years and ten months, in fifty-five(55) occasions,including assessment of installation and operational situationof physicalfacilities, audit of various business records, and overall en-

vironmentalassessment of the factory including sampling of materials

, through which no particular act in violation of law was revealed.Yet, upon filing of a civil petition against the complainant, the respon-

dent once again conducted an audit similar to the one that had pre-

viously beenconducted. The complainant thereupon filed the consti-

tutional complaint in this case on the ground that conducting the audit at issue in this case was unconstitutional as violative of the complainant's freedom of business.

B. Summary of the Decision

The Constitutional Court, by a majority of five out of nine Justices, rejected the constitutional complaint in this case on the ground thatthe audit at issue in this case was not unconstitutional. The groundstherefor are stated in the following paragraphs.

(1) Summary of the Majority Opinion

(A) The Wastes Control Act provides that the minister of theMinistry of Environment, governors, mayors, and heads ofKu/Shi/Kun1)may

initiate and conduct audits. It, however, generally places norestrictions upon the specific content of the audit such as the frequen-

cy, time, and method of audit. As theresult, there is a room for in-

fringement upon the freedom of business of citizens through excessiveaudits in terms of frequency, time, and method thereof. However, the legislative purpose of the above provision of law is to achievethe public interest of preservation of the environment and creation ofa pleasant living environment by guiding and supervising the appro-

priate treatment of waste products, and, as such, its legislative purposeis legitimate. In light of the significance of harm caused by environ-

mental pollution and the importance of advance prevention, there is an acknowledgeable need for frequentsupervision and diversified au-

thorities for performance of audits, in order to secure effectivenessof the audits. Therefore, the Wastes Control Act itself, which servedas the legal ground for the audits at issue in this case, maintainsan appropriate balance between the legislative purpose and the means,and does not infringe upon the essential aspect of the constitutionallyguaranteed freedom of business.

(B) Even an exercise of state authority based on constitutionaland legitimate law, should such state authority be exercised arbitrarilyand without reasonable ground beyond original legislative purpose,could be unlawful as deviation from and abuse of discretion and thusbecome an unconstitutional exercise of state authority.

1)In most of the occasions, audits in this case by various auditingauthorities including the respondent were initiated primarily by civilpetitions or appeals by residents. In light of the variety of the causesof environmental pollution, the significance of harm, and the difficultyof restoration thereof, prevention of environmental pollution cannot be sufficiently achieved by voluntary observance of relevant laws by individuals or private business entities seeking economic profits, norcan environmental pollution be effectively prevented by regular auditsby supervising authorities. When civil petitions are filed concerning, for example, the harm caused by environmental pollution or there isotherwise concern for environmental pollution, spontaneous and frequentaudits are necessary to prevent in advance environmental pollutionby waste products or avoid dissemination of harm caused thereby.Furthermore, supervision and control over environmentally injurious industries cannot be done by supervising authorities alone; rather,its purpose can be achieved only by relying upon multiple methods including the neighborhood vigil and supervision. Therefore, civilpetitions of residents are an important part of the structure of super-

vision over the business entities involving waste products, and the state authorities including the respondent are legally obligated to act and notify

upon filing of civil petitions by residents. The officialrecord of this case indicates that the audits conducted by the respon-

dent were conducted pursuant to the provisions of law to examine whether the complainant was in observance of relevant laws, and reveals no evidence or other materials showing that the respondent deviated from and abused its discretion as a means to conveniently resolve civil petitions beyond the original purposes.

2)The audits at issue in this case directly restricted business activities of the complainant, thereby causing hindrance in overallbusiness activities of the complainant. However, such restraint did not reach the level unbearable by the complainant or mandating theclosure of business activities. Rather, the complainant is legallyobligated to respond to the audits conducted by the respondent for the sake of the important publicinterest of preservation of the envi-

ronment, and the harm caused by performance of such obligation, upto a certain extent, is an inevitable burden that the complainantshould bear.

The act of audit by the respondent at issue in this case, then,was an appropriate means to achieve the legitimate public interest ofthe preservation of the environment, and can otherwise not be deemedas an act that was a deviation from or an abuse of the discretion on the part of the respondent. Therefore, the audits at issue in this case were not in violation of the Constitution.

(2) Summary of the Dissenting Opinion

The Constitution mandates that any state authority, even if underthe law, should be exercised in a fair manner in conformity with thelegislative purpose and, also, should be exercised in a way least re-

strictive upon the holders of basic rights. The authority to audit pursuant to the Wastes Control Act should also be exercised, as amatter of course, in observance of such constitutional mandate. Stateauthorities in this case including the respondent, however, initiated audits, guided by inertia, upon filing of a civil petition or appeal byresidents regardless of the reliability of the civil petition or the intervalfrom the immediately preceding audit, although previous audits hadnot revealed any problems concerning the complainant. This is un-

deniably an unconstitutional exercise of state authority as an arbitrary exercise of authority to audit provided by law, under thename of law, solely as a solution to civil petitions, without consideringthe harm and the pain to be suffered by the complainant, by the statethat is obligated to protect basic rights. In addition, should the stateauthority be swayed by civil petitions, fair execution of law may notbe expected, and, ultimately, it may not be possible to realize publicinterests through important national policy or public interest industries.

Indiscreet and repeated audits of the same or similar kind onlyby different state authorities conducting audits compel nothing but thesacrifice of the complainant regardless of the obtainability of the pur-

pose of the audit. Such audits demonstrate an exercise of state au-

thority beyond constitutional limits and a typical example of exhibitoryadministration. The state should establish a solution thereto, by wayof, for example, improvement of the comprehensive audit system, to prevent excessive or repeated audits, thereby promoting uniformityand effectiveness of the exercise of auditing authority yet minimizingthe restriction upon basic rights.